ANALYSIS: A forthcoming court decision could prevent companies from responding to their critics

April 08, 2002
by PAUL HOLMES

As I write this column, PR executives at Nike's corporate headquarters are anxiously awaiting the verdict of the California Supreme Court on a case that has chilling implications not only for the athletic shoe marketer, but also for the entire PR industry. By the time you read this, a verdict may have been rendered - one that could have a devastating impact on what companies under fire from activists can do to defend themselves.

As I write this column, PR executives at Nike's corporate headquarters are anxiously awaiting the verdict of the California Supreme Court on a case that has chilling implications not only for the athletic shoe marketer, but also for the entire PR industry. By the time you read this, a verdict may have been rendered - one that could have a devastating impact on what companies under fire from activists can do to defend themselves.

Nike has been accused of violating laws designed to protect consumers from deceptive advertising. However, the case doesn't involve claims Nike made about its sneakers, but a campaign defending the company's labor-relations record in Asian factories. In February, lawyers debated whether the campaign was political speech, which is protected by the First Amendment, or commercial speech, which is subject to California state law.

Nike argued that its campaign was "classic political debate.

But critics claim the campaign was commercially motivated. Said attorney Paul Heurber, "When the critics said, 'You are running sweatshops and you should not buy Nike shoes,' Nike said, 'No, no, no, these charges are false. In that context, the meaning connected to those statements is, 'You should buy shoes.'"

The case would be troubling if it involved a paid ad - but it doesn't. It involves a press release distributed by Nike, denying abuses at its plants, and citing a favorable report by Andrew Young, former US ambassador to the UN. The company said it guaranteed a "living wage

to all its workers, that its workers in Southeast Asia make twice the local minimum wage, and that it complies with local government regulations on workplace issues.

Under normal circumstances, journalists would evaluate these claims, as well as the counterclaims of the company's opponents, and present both points of view, along with whatever additional facts they consider pertinent.

Ultimately, readers would be in a position to evaluate the credibility of both parties, and come to their own decision.

But if Nike's critics succeed with their bid to silence the company, it would create a situation in which activists could make any claim they like about a company's policies and practices - as long as they weren't doing so for commercial purposes - while the corporate response, if there was a response, would be subject to intense scrutiny.

That would be great news for demagogues (and - not incidentally - for trial lawyers), but lousy news for the public, whose interest is best served by allowing both sides of any argument to be heard, and their respective merits discussed openly.

One encouraging sign is that Nike is being supported in its case by the ACLU, which filed an amicus curiae brief. But the company has received little support from the PR industry. The PRSA, for example, has made no official statement on what is clearly a subject of interest to all its members.

Paul Holmes has spent the past 15 years writing about the PR business for publications including PRWeek, Inside PR, and Reputation Management.

He is currently president of The Holmes Group and editor of www.holmesreport.com.